Unemployed temporary workers forced to spend the new year at a Tokyo soup kitchen have found themselves at the centre of a political storm after a senior politician questioned their work ethic.

As Japan greeted the Year of the Ox amid mounting pessimism over the state of its economy, more than 500 recently sacked workers queued up in a central Tokyo park for free food and shelter, and advice on how to survive recession in the world's second biggest economy.

The jobless who have spent most of the past week in Hibiya Park, a stone's throw from Japan's parliament, are among tens of thousands of temporary workers who were laid off at the end of last year.

More than 85,000 temporary and part-time workers are set to lose their jobs by the end of March, far higher than the 55,000 estimated earlier in the year.

But Tetsushi Sakamoto, a senior Liberal Democratic party MP, sparked anger when he suggested that the park's new residents were workshy.

"I wonder if they are really serious about working," he said, before comparing them to radical student activists in the late 1960s. Sakamoto later apologised for the remark but has came under mounting pressure to resign.

"The remarks were so insulting that a retraction is not enough," said Yukio Hatoyama, secretary general of the opposition Democratic party. "He should be dismissed immediately."

A network of unions and community groups opened the soup kitchen on the new year to provide emergency help to the ranks of the new destitute – mainly men under 50 who once worked for subcontractors that make and supply parts for major Japanese exporters.

Earlier this week the residents were moved to vacant schools and government buildings, where they will be allowed to stay until 12 January. Around the country, about 3,700 people spent the holidays in temporary accommodation, many of them men who had been laid off from temporary jobs.

The country's car industry is in the midst of laying off more than 6,000 contract workers, including 3,000 of them at Toyota, which today announced more temporary factory closures in over the next three months.

Sony, meanwhile, is to cut 8,000 temporary jobs worldwide by the end of March 2010 and a report today said Sanyo was considering cutting 1,000 workers in the coming months.

Temporary workers were a rarity in the Japanese manufacturing industry until former prime minister Junichiro Koizumi's free market reforms in 2004 enabled firms to use non-regular labour in their factories. Now, about one in three Japanese workers are on part-time or temporary contracts.

According to the health and welfare ministry, the number of temporary workers reached 3.8 million last year, almost 20% more than in 2007. The number rose by more than 90% in the manufacturing sector alone.

In better days, the arrangement suited employers keen to cut personnel costs, and gave workers the freedom to move between jobs. But, as the recent flurry of layoffs proves, it also made temporary workers very expendable.

In response, MPs are debating a proposal to restrict the use of so-called "dispatch workers" in manufacturing. "I hope the discussions will lead towards a ban on day labour dispatch," Yoichi Masuzoe, the labour minister, told reporters.

Volunteers at Hibiya Park said they had been overwhelmed by the number of people seeking help after the global financial crisis forced Japanese companies to slash workforces.

"We didn't expect so many people to turn up," said Satoshi Tokairin, a camp organiser. "We knew there would be a big problem over the new year and asked the government to act quickly. But they didn't listen."

Toru Hayashi is typical of the thousands who were turfed out of their company lodging as soon as they became unemployed.

"I have no job, no money and nowhere to live," said Hayashi, who lost his job with an office furniture supplier early last month. "The sub-prime crisis has hit real-estate and we got only half the orders we had the previous year."

The 45-year-old, who has spent the past few weeks sleeping in a 24-hour internet cafe, makes no attempt to hide his contempt for prime minister Taro Aso's response to the economic crisis.

"The government talks a lot but does nothing," he said. "Aso is hopeless. We are having to depend on the generosity of ordinary people to make it through the bad times."